Thursday, May 6, 2021

ETFs liquidity improves in Q1:2015

The performance of the Exchange Traded Funds (ETF) was better in the first quarter of 2015 compared to the same quarter in 2014, new data from Botswana Stock Exchange (BSE) has shown.

According to the BSE’s market performance report for up to the period ended 10 April 2015, liquidity in ETFs, as indicated by turnover, generally improved in 2015.

“ETFs were characterised by improved performance in the period under review in comparison to the same period in 2014, as can be seen in the volumes traded as well as the turnover,” said Deputy CEO, Thapelo Tsheole.
The BSE market review for the period showed BettaBeta ETF experienced significant inflows which generated a total turnover of P85.8 million in 2015. On the other hand, trades in NewGold ETF amounted to P25.8 million whereas the NewPlat ETF generated trades valued at P23.6 million. Tsheole said ETFs are popular for their high liquidity due to the presence of a market maker, adding that these products or instruments present diversification opportunities for investors if the opportunities are taken advantage of.

“……the performance of the three ETFs has been positive in 2015 and that of the BettaBeta and the NewGold ETFs has outpaced even the appreciation in the DCI on a year to date basis,” added Tsheole.
An ETF, or exchange traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange. ETFs experience price changes throughout the day as they are bought and sold. ETFs typically have higher daily liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors. 

In Botswana, these products allow more Batswana to climb the ladder of┬ámarket investment┬áas they have┬áa low fee cost structure compared to┬ácompanies that are listed on the main board. The current ETFs tracks gold and platinum and there have been calls for the local market to look at local instruments like diamond backed debentures that will be symbolic of Botswana’s pride. Diamonds contribute immensely to Botswana’s GDP.

“We are waiting for the day; and I am calling all the market participants (brokers, retail and institutional investors) to come up with a local ETF,” Herin Mendis, Chief Executive Officer of the BSE said at time when NewGold ETF was listed. NewPlat is said to be the largest ETF in Africa after NewGold and it is also listed in Mauritius. Gold is a major medium of international exchange after the US dollar and has been able to withstand the┬ácurrent world’s economic crisisÔÇöthe worst ever since World War II ÔÇô as investors who were wary of the US currency took cover by investing in the┬á yellow metal.

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